Israeli cos displaying at US Army exhibition doubles

The restriction of US defense aid to Israel to procurement from companies active in the US is forcing Israeli defense companies to search for foreign markets.

Special walls developed by Ortech Defense Systems that can be rapidly deployed in order to protect assembling forces from rockets and mortars; lightweight mobile barriers for stopping car ramming attacks; advanced Identification, Friend or Foe (IFF) systems aimed at preventing friendly fire incidents; a robot that detects and removes especially destructive roadside charges and shells were among the items that will be displayed at the Association of the United States Army 2018 Annual Meeting today in Washington.

According to SIBAT - The Foreign Defense Assistance and Defense Export Organization in the Ministry of Defense, 13 Israeli companies, most of them small or medium-sized, will participate in the prestigious exhibition this year. They will try to gain a foothold in the US market through new deals and future cooperation. The main reason for this effort is the new US aid agreement, which recently took effect, and which restricts Israel's ability to procure weapons from local industries.

In the aid agreement, signed during the term of former US President Barack Obama, Israel lost its previous option of converting a quarter of US aid into shekels for procurement from Israeli companies. This means that starting in the coming years, all of the Israel Ministry of Defense' procurement using US aid will have to come from companies operating in the US.

According to Ministry of Defense sources, the changes in the US aid agreement are part of the reason for the significant increase in the number of Israeli companies with displays at the exhibition in the US. The number of Israeli companies with displays, which was eight last year, is almost double that this year.

Not only Iron Dome

Israel's 2017 defense exports set an all-time record of $9.2 billion in 2017, 14% of which were to the US market. Defense companies believe that if the deals under discussion go through, this number will jump in the coming years.

"The US market has not changed significantly. As in the past, preference is given to local companies. At the same time, the budgets aimed at this market are huge, so there is also room for small Israeli companies to gain a foothold," says SIBAT principal deputy director Paul Friedberg. "The small companies making presentations in this exhibition have to do their homework in order to obtain cooperation agreements with US companies. Were I a small companies making a presentation, I would look for a US frame in order to enter this market."

As recently reported by "Globes," Rafael Advanced Defense Systems Ltd. is getting ready for the first deal for exporting the Iron Dome rocket interception system to the US army, which will apparently take place this year. The monetary value of the emerging deal is unclear.

Simultaneously with the first export deal for Iron Dome, Rafael is trying to a promote a deal for equipping US Abrams tanks with its Trophy active anti-missile defense system. At the same time, IMI Systems Ltd. (IMI), which is about to be acquired by Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), is proposing to equip US army Bradley and Stryker armored vehicles with the lightweight version of its Iron Fist system for protection against anti-tank missiles. These deals are likely to run into the hundreds of millions of dollars.

Elbit Systems-IMI head-to-head against Rafael

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It has recently become clear that Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT)-IMI is competing head-to-head against Rafael in the armor program for US armored vehicles. In recent months, Rafael has held a number of successful demonstrations in Israel of a lightweight version of Trophy in an attempt to expand marketing for it to armored vehicles at the expense of the competing Iron Fist system. Rafael, however, is still developing the lightweight version. In trials, it used an interim version of Trophy containing elements of the new lightweight version. The trials have so far been successful.

IMI will display a lightweight version of its active defense system at the exhibition, and will also unveil its new artillery shell, which it calls a "Super-High-Explosive (S-HE) Artillery Projectile." IMI executives say that the 155-millimeter shell is five times as effective as an ordinary explosive, thanks to the combination of two unique technologies that increase the damage caused to the target through the use of controlled fragmentation.

This artillery shell is adopted to all artillery used by armies around the world. Its warhead is capable of hitting targets vertically after being guided to a predetermined point. Due to the vertical angle at which it strikes the target, it causes much more damage than an ordinary shell. IMI says that its shell complies with the international conventions banning the use of cluster munitions.

At the same time, Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) is planning to display a new automatic system for neutralizing explosives. Development of the system was recently completed at the company's robotic systems plant, and the first system will be delivered to an initial customer for testing and assessing its capabilities.

The system, which is based on a series of innovative sensors installed on a robot platform developed by IAI, is designed to detect and identify explosives of various kinds posing a threat to maneuvering forces.

When explosives are detected, the robotic tool is capable of removing it with a special blade. According to IAI, the system works fully automatically without jeopardizing human life, from the detection stage to the removal of the explosives. "The system makes it possible to open threatened traffic routes - an action hitherto taken by soldiers under great risk," IAI EVP, VP R&D and Programs and unmanned ground systems manager Meir Shabtai said.

Published by Globes [online], Israel business news - en.globes.co.il - on October 8, 2018